The Court wrote that federal Medicaid law prevents states like North Carolina from claiming such a large share of med mal awards. The purpose of the claim in the first place is to allow states to reimburse themselves for Medicaid money they spent on individuals who later went on to collect sizable sums. The Supreme Court decided that the amount contained in the North Carolina law was unreasonable and arbitrary. Justice Anthony Kennedy, writing for the majority, said that North Carolina law acts as a one-size fits all approach and does not take into account individual circumstances.

In the case of the North Carolina family, which we previously discussed here, it means that they will be able to keep more of the $2.8 million awarded to Emily Armstrong in a recent medical malpractice case. Emily, who is only 13-years-old, was born with serious disabilities and requires constant care. The girl was diagnosed with cerebral palsy soon after her birth and is blind, deaf and mentally handicapped. The family sued her obstetrician, claiming that his history of drug abuse led to mistakes during the birthing process. The case was settled for millions which set in motion the recent Supreme Court case.

North Carolina officials caught wind of the big settlement and went after the Armstrongs for a cut of the money. The state said it spent more than $1.9 million in Medicaid funds paying for Emily’s medical care and that it should be allowed to try and recoup some of that money. The state then put a lien on $933,333.33, exactly one-third of the settlement.

The Supreme Court decided that the federal Medicaid anti-lien provision prevents states from making claims to a any part of a Medicaid beneficiary’s tort recovery that has not been specifically designated as a payment for medical care. From now on, states like North Carolina will now have to reevaluate how they handle reimbursements from Medicaid recipients who win suits or reach lucrative settlements.